Overhead

Overhead refers to the ongoing business expenses not directly attributable to creating a specific product or service but are necessary for the general operation of the business. These costs are often fixed or semi-fixed and must be paid regardless of the level of production or sales. Common examples include rent for office space, utility bills, administrative salaries, insurance, and depreciation of equipment. Effectively managing overhead is critical for a company's profitability, as these expenses can significantly eat into gross profits if not controlled.